The present application relates to systems and methods of financing an insurance transaction. In particular, the present application relates to systems and methods for financing an insurance transaction using a combination of cash payments and intellectual property assets.
An insurance transaction typically involves obtaining protection to compensate the insured if a specified event occurs. Common examples include auto, home, health and life insurances. Each type of insurance typically provides compensation to the insured in the event of a predefined event, such as an accident or theft in the case of automobile insurance. In most cases, the insurance premium is determined based on the probability that the event will occur and the compensation amount that will need to be provided if the event occurs.
Although insurance is most frequently obtained for assets such as a home, an automobile, health, etc., insurance may also be obtained for many other types of assets and events. In general, insurance is available whenever there is some risk of loss that an insured wants to protect against. For example, a company may wish to insure against the risk that a court will award a claim against them in a legal matter.
In return for the promise of compensation if the specified event occurs, the insured usually pays an insurance premium to the insurer. The insurance premium is generally a cash payment made on a periodic basis. The amount of the insurance premium is generally set by the insurer according to the probability and magnitude of risk being assumed by the insurer. For example, for a loss that is not very likely to occur and/or is not very expensive, the insurance premium may be low, while the insurance premium may be much higher for a loss that is very expensive and is likely to occur.
As stated above, one type of loss that a corporation may be likely to incur is a loss or expense related to a lawsuit. One type of legal loss or expense that may occur is a loss associated with an intellectual property lawsuit. Other examples may include losses associated with environmental or mass tort matters. These types of losses may be exceedingly expensive and, at least in some industries, also relatively likely to occur. When these factors combine (i.e., high magnitude of loss coupled with high probability of loss), insurance may be not only expensive but very difficult or impossible to obtain. If insurance can be obtained and normal assets are used to pay the insurance premiums, the amount of cash or other assets consumed may be considerable.
What is needed is a system and method for structuring an insurance transaction to provide protection against a loss. What is further needed is a system and method for protecting against a loss related to an intellectual property lawsuit, as well as to increase the availability of such protection. What is yet further needed is such a system and method configured to utilize intellectual property assets to finance the insurance premium associated with the protection.